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Thursday, February 10, 2011

A More Frugal Economy

Remarks by Futurist Glen Hiemstra at WCTA

I had the pleasure yesterday of introducing Glen Hiemstra to the monthly breakfast meeting of the Washington Clean Tech Alliance (WCTA). Glen gave a wide-ranging but thematically coherent and engaging talk on what the future might hold over the next 10-50 years. One key point was how we have moved, perhaps permanently, to a "frugal economy" where people have less, buy less, and want less. It may be making a virtue of necessity for some, but for others, especially those focused on sustainability, it has a deeply satisfying appeal.

Glen noted that during the recession of the early 1980s unemployment was at 10% and several economists declared that the jobs lost would never come back. The Roaring 90s created new industries, new sectors and millions of jobs, however, and those who thought the economy had had a permanent structural change were proved wrong. Today some make a similar assertion about the new normal and the permanent loss of jobs. While this may be true, the economy can and generally has recovered, creating new vehicles of employment and prosperity. But it might take "a generation or two." There are several trends, however, that may make this time different, and not just the much-talked-about ones like labor efficiency and the globalization of the corporate workforce.

While Glen envisions a low likelihood of a major oil shock over the next 5-10 years, the longer term trend is clear; we need to develop alternative energy sources. There are different definitions of peak oil, and by some peak oil is already in the rear view mirror. However, one perverse effect of our reliance on carbon is a melting polar ice cap, which might well provide access to new major oil discoveries that would further postpone the fossil fuel day of reckoning. New discoveries off Brazil, new efficiencies in conventional oil recovery and the scaling of nonconventional sources such as oil sands all delay the inevtiable pain we will eventually face as oil supply fails to track ever-growing oil demand. Alternate energy forms lack the energy density of oil, and cannot currently replace it.

Glen sees a tipping point currently on cleantech, with companies now fully engaged even as governments dither in the face of political paralysis. Even those companies guilty of greenwashing are becoming converts. Talking about clean and greed credentials they actually lack, they find their PR raising both public expectation and internal employee enthusiasm. The result is slowly to turn the hype into reality. Companies that are not seeking sustainability risk becoming uncompetitive with their image, their products, and their ability to attract and retain both customers and staff.

The ongoing retirement of the Baby Boom generation and increased longevity is a trend on which many have commented. Fewer workers and more retirees (even with deferred retirement and greater labor efficeincy) will still imply lower production per capita and thus pressure on our standard of living. As with business, so too with households: we will all have to do more with less.

Meanwhile, social media is enabling a global youth culture which, like many youth movements before it, values freedom, environmental stewardship, and a sustainable future. The global interconnectedness of today's version is different, and the global alignment, together with the retirement bulge, could presage an even more aggressive shift to a sustrainable future where frugality is not only necessary, but a point of pride.

Frugality is a likely long term trend, the start of which we are now seeing as a direct result of the Great Recession. Demographics are driving it, as are the globalization of business, the weakening of governments in the face of corporate power, the demands for higher living standards in the developing world, and the limits to growth imposed by the carrying capacity of the Earth. The future may have less, and be more frugal; however, it need not be worse. New technology, higher efficiencies, and new models for economic sustainability (e.g. double closed loop manufacturing) may make our future more appealing than our present.

Glen made many other interesting comments, some of which I will strive to feature in future posts. He also provided several references for further reading interest, including:

Simon Anholt, originator of the concept of nation brand or place brand, and a consultant to numerous national governments and others on marketing place in the global economic marketplace.

The Age Wave, by Ken Dychtwald, published in 1989, and which describes the future impacts of the demographics on politics and economies.

Storms of My Grandchildren, by noted NASA scientist James Hansen, which provides a lucid explication to the layman of climate science and the future impacts of climate change.

Moving Mars, a novel by Greg Bear that posits a future where 6 corporations effectively govern and actual governments are reduced to vestigal relics, "like the Queen of England."

Membership in the WCTA is open to businesses in Washington State working in the cleantech, renewable energy or sustainability sectors. Reduced dues are available for startup businesses. WCTA events are open to the public as well as members. More information can be found on the WCTA web site.